Report: ‘God’ of oil trading shuts Southport hedge fund

By Alexander Soule

Updated
2:01 pm EDT, Friday, August 4, 2017

The 200 Pequot Ave. offices in Fairfield that Astenbeck Capital Management shares as its headquarters along with multiple other firms. On Aug. 3, 2017, Bloomberg reported plans by Astenbeck to shut down and return investor money after lackluster trading results in the oil markets in which it has specialized under founder Andrew Hall. less

The 200 Pequot Ave. offices in Fairfield that Astenbeck Capital Management shares as its headquarters along with multiple other firms. On Aug. 3, 2017, Bloomberg reported plans by Astenbeck to shut down and ... more

Photo: Alexander Soule / Hearst Connecticut Media

Photo: Alexander Soule / Hearst Connecticut Media

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The 200 Pequot Ave. offices in Fairfield that Astenbeck Capital Management shares as its headquarters along with multiple other firms. On Aug. 3, 2017, Bloomberg reported plans by Astenbeck to shut down and return investor money after lackluster trading results in the oil markets in which it has specialized under founder Andrew Hall. less

The 200 Pequot Ave. offices in Fairfield that Astenbeck Capital Management shares as its headquarters along with multiple other firms. On Aug. 3, 2017, Bloomberg reported plans by Astenbeck to shut down and ... more

Photo: Alexander Soule / Hearst Connecticut Media

Report: ‘God’ of oil trading shuts Southport hedge fund

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A $1.4 billion hedge fund in Fairfield is winding down after its founder — deemed a legend in oil-trading circles — failed to foresee a boom in production that held oil prices lower the past few years, according to Bloomberg.

Andrew Hall lives in Westport with his Astenbeck Capital Management having its main office at 200 Pequot Ave. in the Southport section of Fairfield, and the firm employing about 25 people at last report. Hall previously led the Phibro commodities trading firm based today in Stamford, with Hall having honed his reputation at Phibro in the 1980s with a string of big bets on oil prices that paid off.

Bloomberg reported Thursday the planned dissolution of Astenbeck, while noting Hall’s reputation in the oil trading industry had some calling him “God” until the past few years when Hall predicated Astenbeck’s trading strategy on OPEC being able to raise prices by reining in production.

That did not occur and the Astenbeck Master Commodities Fund II is down almost 30 percent in the first half of the year, according to Bloomberg.

Astenbeck had drawn no shortage of deep-pocketed investors since its launch in 2009, to include the state of New Jersey, which placed $100 million at Astenbeck’s disposal in 2011; and the National Railroad Retirement Investment Trust pension fund that listed an $80 million investment as of 2016.

Equity hedge funds focused on the energy sector were down 6.7 percent on average between January and June, according to HFR, versus a 3.6 percent gain over the same stretch for hedge funds of all types included in a weighted composite index published by the Chicago-based analyst firm.

In the second quarter for the first time in nearly two years, HFR determined, investor allocations outweighed redemptions, or money paid back to investors in cashing out their positions. As of June, hedge funds managed $3.1 trillion in capital globally, according to HFR.

As a major center in the hedge fund industry, lower Fairfield County has seen its fair share of funds running aground, dating back to 1998 with John Meriwether’s Long Term Capital Management in Greenwich. The fund succumbed after financial crises in Thailand and Russia, prompting a U.S. government bailout and a federal study into the macroeconomic risks of hedge funds controlling or influencing mammoth pools of capital.

Greenwich was also home to Amaranth Advisors, which managed assets of $9 billion before collapsing in 2006 after a trader based in Canada made disastrous bets on natural gas futures. In Westport, Pequot Capital would close its doors in 2010 after paying a $28 million fine to the Securities and Exchange Commission for insider trading by an employee nearly a decade before.

And in 2013, Stamford-based SAC Capital paid $1.2 billion in settlements following a U.S. Department of Justice investigation of insider trading in the hedge fund industry. SAC founder Steve Cohen would continue his trading operation as a family office called Point72 Asset Management to invest his own fortune, and has emerged as a major philanthropist even as he reportedly ramps up to begin managing other investors’ money upon the expiration next year of an SEC order restricting him from doing so.

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